Warrnambool backs Saputo bid, suitors fight on

Local dairy players Murray Goulburn and Bega Cheese are refusing to capitulate in the $500 million battle over Warrnambool Cheese and Butter.

Both suitors say the fight is far from over despite the Warrnambool board’s decision late on Friday evening to accept a sweetened $9 a share offer from Canadian bidder Saputo. As well as lifting ifs offer from $8 a share cash, Saputo also dropped a 50.1 per cent minimum acceptance condition.

Perpetual head of equities Matt Williams said the bids being placed for Warnambool were no longer linked to the current value of the business.

“We’ve crossed the line between what was value to now strategic value where valuations have gone out the window," he told Financial Review Sunday. “It’s now really about the strategic value of these assets in an environment where China wants more milk, wants more dairy products and this is very long run.

Warrnambool boss David Lord is adamant Saputo is the best option for his shareholders - even though the implied value of Bega’s cash and share offer is higher - and Murray Goulburn’s the same value.
AFR

“Shareholders are the winners though, ultimately."

Mr Williams lamented Perpetual’s small stakes in both Bega and Warnambool. “As these bids have progressed we’ve sold down our shareholding to the point where now we wished we maybe hadn’t, as these bids have gone on," he said.

But Warrnambool boss David Lord is adamant Saputo is the best option for his shareholders – even though the implied value of Bega’s cash and share offer is higher – and Murray Goulburn’s the same value.

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“Saputo have also moved to remove all conditionality in relation to their offer, so for shareholders that provides complete certainty. There is significant completion risk associated with the Murray Goulburn offer," Mr Lord told Financial Review Sunday on the Nine Network.

“MG need to receive competition regulator clearance and we know that that process could take between three and six months."

He also said the board had decided not to proceed with Bega’s offer because it was predominantly made up of Bega scrip, with a small cash component.

“There is risk for WCB shareholders in holding Bega shares into the future when there is no guarantee about the value of the Bega share price after the transaction would be completed," he said.